Britain and the United States heard a faint echo from the 1970s yesterday as the escalating cost of a tank of petrol contributed to higher inflation. And with tension in the Middle East providing another reminder of life three decades ago, the message last night was that consumers can expect more of the same over the coming months.

The rising cost of energy over the past 18 months has come as a shock to almost every commentator. When a barrel of crude reached $40 (£22), it was assumed the price would quickly halve. When it reached $50, the expectation was that the bubble would quickly burst. Today, with crude above $65 in the futures markets, the talk is a bit more cautious.

France's prime minister, Dominique de Villepin, told a news conference yesterday that high prices were here to stay, and he called on oil firms to plough their sizeable profits into new plants.

"This crisis, we know, is likely to last. All the factors have come together for oil to remain expensive in the years and decades to come," he said. "Our refining capacity is saturated and cannot adequately cope with French demand."

The lack of refining capacity has been one factor behind the upward trend in crude prices over the past two years. According to the experts, the lightning war against Saddam Hussein would make oil supplies more certain and help to keep the cost of energy low. Oil producers have certainly been in a mood to help consumers, with the Opec cartel increasing its output quotas at regular intervals. But it has not been enough. Demand, particularly from China and the US, has been strong. There has not been the refining capacity to turn the crude into petroleum. And the prospect of further instability in the Middle East - heightened by the stand-off between Iran and the west over Tehran's nuclear programme - has meant the market is operating with a significant risk premium.

The upshot is that nobody knows where oil prices will go from here. One theory is that the end of the driving season in north America coupled with a slight easing of the recent rapid pace of growth means that crude prices are at, or close to, a peak. Another is that higher prices will provide an incentive for investment in the extra refining capacity demanded by Mr de Villepin and that this, coupled with a marked oil-induced slowdown in growth next year, will bring crude prices back to earth with a bump.

Interestingly, the markets take a less sanguine view. "The futures curve suggests that the price of oil will remain around its current level for the next few years," the Bank of England said in its quarterly Inflation Report last week. As the Bank went on to say, the probability that the price of crude will follow the exact path suggested by the futures curve is very small. But the bets being laid by those speculating in oil futures tell a different story from some of the energy optimists. The data, according to the Bank, "suggest that financial markets believe that there is a greater chance of a large rise in the price of oil than a large fall. Currently, market participants judge that there is roughly a one in 20 chance that oil prices will be $100 or higher in August 2006."

A 5% chance of oil hitting $100 a barrel still represents long odds but Goldman Sachs - the biggest trader of energy derivatives - thinks it is a real possibility. It put out a paper this year predicting a super-spike in oil prices to $105 a barrel. "We believe oil markets may have entered the early stages of what we have referred to as a 'super-spike' period - a multi-year trading band of oil prices high enough to meaningfully reduce energy consumption and recreate a spare capacity cushion." Only after that has happened does Goldman Sachs think lower energy prices will return.

Even though the market has paused for breath this week after last week's heady rise, crude was still trading at about $66 a barrel in New York last night. It is already assumed that the $70 level will be tested at some point over the next few weeks, and the gloomier analysts find it all too easy to sketch out scenarios in which it goes much higher than that.

Dominic Bryant, oil analyst at BNP Paribas, said: "One upside risk in the foreseeable future is another hurricane in the US, where some have been predicted before the end of the season in October. Last year, hurricane Ivan in Mexico sent prices up by $6 a barrel."

And if a hurricane could push up prices by $6 a barrel, a terrorist attack on an oil installation in Saudi Arabia would be likely to have an even more pronounced effect. Military action by the US against Iran would make the Goldman Sachs forecast highly plausible.

For the British motorist, the next big milestone is having to pay £1 a litre on the forecourt. With global energy prices at current levels, the chancellor is certain to abandon the proposed 1.2p a litre increase in excise duty on fuel announced in the budget in the spring. Officially, the Treasury position is that the chancellor, Gordon Brown, will take another look at the issue in the pre-budget report in late November or early December; in reality, the planned increase will not take place.

Motoring organisations say that unleaded at £1 a litre may still be some way off. Ruth Bridger, of the AA Foundation, says that over the years, prices are lower in the fourth quarter than in the third, because demand pressures fall as the American driving season comes to an end.

What's more, the lion's share of the cost of petrol is accounted for by tax so it would take a further hefty increase in the cost of crude to push petrol prices through the £1 a litre mark. "The likelihood of petrol reaching £1 per litre is the same as that of crude oil reaching the $80-$90 mark," Ms Bridger said. "This year, a $20 increase in oil price tended to lead to a 10p increase in petrol."

There are a couple of other reasons for guarded optimism. Oil prices are high, but not as high in real terms as they were when Iran and Iraq went to war in 1980. And although inflation in Britain is higher than at any time since Labour came to power more than eight years ago, it is nowhere near as big a headache for Mr Brown as it was for Denis Healey in 1974 and 1975.

At that time, the threshold agreements brought in by Ted Heath's government meant that the higher cost of living caused by the four-fold increase in crude prices in the autumn of 1973 fed straight through into higher wages, causing an inflationary spiral. By the time it peaked in the summer of 1975, inflation was more than 10 times as high as it is now.

Gerard Lyons, chief economist at Standard Chartered Bank, says there are three reasons why the impact of higher crude prices has been less marked than it was in the 1970s. First, some countries - such as Indonesia - have used their financial resources to subsidise energy prices. Second, for most of the period when crude prices have been rising, the dollar has been going down. That has helped ameliorate the impact of dearer crude prices for the big importing nations because crude is priced in dollars. Finally, inflationary pressure is generally much weaker than it was three decades ago.

On the other hand, Mr Lyons adds, there are similarities with the two oil shocks of the 1970s. "Just as then, prices have risen sharply; they have risen in a short space of time, and they have risen more sharply than people have anticipated. There are now signs that the impact of dearer crude is starting to feed through."